Nova proposal daylight robbery
SIGNIFICANT INFIGHTING: UNSUCCESSFUL ATTEMPT TO REMOVE CHAIRPERSON AND FIRE CEO
Scheme potentially unfair as it will unduly dilute debenture holders’ investments. Moneyweb
The current proposal to list the Nova Property Group on the JSE isn’t fair to the 20 000 former Sharemax investors, as the 43% equity stake the seven founding shareholders will receive is excessive and will unduly dilute debenture holders’ investments.
Nova financial director Rudi Badenhorst dropped this bombshell at Friday’s debenture holders’ meeting in Pretoria, where former Sharemax investors had to vote on whether to proceed with the proposed listing or not.
After the meeting, Badenhorst said: “I sat next to Dominique [Haese, Nova CEO] on the stage and it must have looked as if I endorsed the proposal. I do not”.
Dirk Koekmoer, operations director, said: “I tried to convince the board that the 43% was not fair to debenture holders. We wanted it reduced to around 10% to 15%. 43% is pure daylight robbery.”
Director ri
Badenhorst also lifted the veil on the significant infighting among the Nova executive and other founding shareholders. Badenhorst was recently asked to resign, while Koekemoer was suspended.
This followed an attempt by the two, and three minority shareholders, to remove Nova chairman Connie Myburgh and Haese from the board.
The shareholder meeting where it was to be affected never took place.
These developments occurred ahead of Friday’s meeting. Several lawyers strongly questioned the validity of the proposal, which Myburgh authored.
The meeting resulted in a formal undertaking by Myburgh, on behalf of the board, to amend the proposed scheme of arrangement to make the listing a condition for the scheme’s implementation.
‘The scheme isn’t fair’
This provides debenture holders with comfort that if they approve the scheme, they won’t be trapped in an unlisted company.
But with Badenhorst’s assertion that the scheme is unfair to debenture holders, it may face more aggressive criticism than was seen at Friday’s meeting.
Note, the proposed 43% equity interest in the listed entity stems from the 96% stake the founding shareholders received for free in Nova in 2012.
The four board members were the main beneficiaries and received around 22% each, while three others received 3% each.
The remaining 4% stake in Nova went to around 2 000 former Sharemax investors who exchanged their debentures for Nova shares. They effectively paid R94 million for this 4%.
Architect and author
Myburgh was the scheme’s architect and author.
It’s this 96% shareholding of the founding shareholders that’s set to be converted to a holding 43% in the new entity. Upon listing, this stake would represent around R950 million of the estimated net asset value of R2.2 million.
This is significantly more than the R750 million the 19 700 debenture holders, who invested R4.4 billion in Sharemax, are set to receive relative to the net asset value.